TIDMSGZ
RNS Number : 6339A
Scotgold Resources Ltd
29 September 2015
SCOTGOLD RESOURCES LIMITED
Re: Annual Report for the year ended 30 June 2015
Scotgold Resources Limited ("Scotgold" or "the Company")
(ASX:SGX) (AIM:SGZ) announces its final results for the year ended
30 June 2015. The Company's full annual report for the year to 30
June 2015 is now available on the Company's website and will be
posted to shareholders shortly. The financial information set out
within this announcement is not the audited results but has been
extracted from them. In addition to the audited financial results
for the year, the Annual Report contains an Operational Review that
is based on the operational updates that have been made by Scotgold
and contains no new material information.
For further information
Scotgold Resources Limited Westhouse Securities Limited
Richard Gray Robert Finlay / Alastair Stratton
Chief Executive Officer
Tel: +44 (0)7905 884 021 Tel: +44 (0)20 7601 6100
Capital Markets Consultants Vicarage Capital Limited
Simon Rothschild Rupert Williams
Tel +44 (0)7703 167 065 Tel: +44 (0)20 3651 2911
ABOUT SCOTGOLD
Scotgold Resources Limited was established in 2007 and listed on
the Australian Securities Exchange (ASX:SGZ) in January 2008. The
company's shares were admitted to trading on the AIM market of the
London Stock Exchange (AIM:SGZ) in February 2010.
The Company's principal objective, since listing, has been the
advancement of the Cononish Gold and Silver Project in Scotland's
Grampian Highlands to a production decision and the ongoing
exploration of the highly prospective tenements comprising the
Grampian Gold Project (which is described in greater detail below)
with the view of identifying further project opportunities.
Although the Company's initial application for planning
permission to develop the project in 2010 was rejected, the Company
submitted a revised application and on 25th October 2011, the Board
of the Loch Lomond and the Trossachs Parks ("the Parks Board")
unanimously approved the application subject to the conclusion of
various legal agreements and agreement on a number of outstanding
conditions. These were successfully concluded and on 15th February
2012, the Parks Board issued the Decision Letter granting planning
permission for the development. The Crown Estate Commissioners
unconditional grant of the Crown Lease was confirmed in May
2012.
During 2014, the Company made an application to vary this
planning permission (relating to hours of operation of the
processing plant and work on site) and on 24 January 2015, the
Board of the Loch Lomond and the Trossachs National Park again
voted unanimously to approve the Company's application. As a
variation to a condition of the existing consent, this approval
also has the effect of extending the date by which development
should commence to January 2018.
The Company continues to examine financing options to bring the
project to a development decision.
The Grampian Gold Project comprises Crown Option agreements
covering some 4100 km(2) in the south west Grampians of Scotland
and covers some of the most prospective areas of the Dalradian
geological sequence in the UK. This sequence extends westward from
the UK to the eastern seaboard of Canada and the Appalachian belt
in the US, and eastward into Sweden and Norway, has been identified
by the British Geological Survey as being highly prospective for
both significant gold and base metal deposits. On a more local
scale, the Dalradian sequence extends to the south west from
Scotland into Northern Ireland where it hosts other gold resources
at Cavancaw (c. 0.8 Moz of gold) and Curraghinalt (c. 3.5M oz of
gold).
The Company is conducting a regional stream sediment sampling
program over the wider Grampian gold project area whilst continuing
to evaluate a number of previously identified high grade outcrops
in the vicinity of the Cononish project.
OPERATIONAL REVIEW
CONONISH GOLD AND SILVER PROJECT
During the year, the Company focussed on the completion the
Bankable Feasibility Study ("BFS"), following a review and
optimisation of the 2013 Cononish development plan. This BFS now
forms the basis for discussions with possible finance providers in
order to advance the project to production.
The key inputs to the BFS included
-- A revised Mineral Resource Estimate for the project completed by CSA Global (UK) Limited
-- A gap analysis of the 2013 Cononish Development Plan to
identify areas requiring further input to meet BFS standards
-- A trade off study examining alternative mining methods and
means of access to optimise project returns
-- A variation to the existing planning permission to facilitate
24 hour/6 day plant operations (as opposed to 16 hour/6 day)
Based on the results of the above studies, a Bankable
Feasibility Study (BFS) was completed for the project by Bara
Consulting UK Ltd, highlights of which are shown in Table 1
below
Table 1: Cononish Gold and Silver Project BFS Highlights
PRODUCTION
-----------------------------------------------------------------
Average Production 72,000 tonne per annum
Average LoM Grade (Au 11.8 gram/tonne
Eq)
Average Metal Produced 23,370 ounces equivalent
gold* per annum
Life of Mine 8 years
------------------------------- --------------------------------
FINANCIAL (at Gold US$1,100/oz & Silver US$15/oz)
-----------------------------------------------------------------
Peak Funding Requirement GBP18.5M
Total LoM Capital Expenditure GBP24M
Unit Operating Costs GBP327/ ounce equivalent
gold (US$523/ ounce equivalent
gold)
EBITDA GBP67M
NPV (10%) pre-tax GBP23M
IRR pre-tax 45%
Payback Period 19 months
------------------------------- --------------------------------
* Ounces equivalent gold = ounces gold + ounces silver*15/1100 -
ratio calculated at base case prices of $1100/oz Au and $15.00/oz
Ag
The study demonstrates:
-- Robust Project economics using a base case gold price of
US$1,100/ounce (GBP688/ounce) with an EBITDA of GBP67.4M, a pre-tax
free cashflow of GBP43.4M, pre-tax NPV(10%) of GBP22.5M and a
pre-tax IRR of 45%.
-- Low operating costs with Life of Mine ('LoM') average of
GBP327/ounce equivalent gold (US$523/ounce equivalent gold)
(including Royalties) and Project breakeven (0% IRR) at US$689/
ounce equivalent gold
-- Peak Funding Requirement of GBP18.5M and all in LoM Capital
including contingencies, replacements etc. of GBP24.0M
-- Average annual gold production of 23,370 ounce equivalent
gold with peak production in Year 2 of 28,540 ounce equivalent
gold.
-- Average LoM grade of 11.8 grams equivalent gold / tonne and
peak grade of 15.4 grams equivalent gold / tonne in year 2.
-- Rapid Implementation schedule of 16 months post contract and
finance completion and short Payback Period of 19 months from full
production.
Details of the material assumptions considered in the derivation
of the production target and forecast financial information above
and the BFS Study Executive Summary are provided on Scotgold's
website at www.scotgold.com.au - ASX releases - 05/08/2015 -
Cononish Gold and Silver Project Bankable Feasibility Study and
Bankable Feasibility Study - Executive Summary.
Resources
The new Mineral Resource Estimate ('MRE') for the Cononish Gold
and Silver Project was compiled by CSA Global (UK) Limited (see ASX
release: Resource Estimate Update - 22/01/2015) and utilised a
detailed three dimensional (3D) geological model (as opposed to the
previous two dimensional polygonal estimate (JORC 2004)). This 3D
geological model more accurately estimated the volume of the vein
deposit, as well as assisted in the interpretation of other key
geological features, such as faults and dykes. The new MRE also
incorporated advances in geological interpretation and
geostatistical evaluation, including the use of local uniform
conditioning to optimise the grade tonnage distribution for the
Selective Mining Unit (SMU) dimensions achievable with the planned
underground mining method.
The MRE is classified as Measured, Indicated and Inferred
Resources, (based on guidelines recommended in the JORC Code
(2012)), is reported at a cut-off grade of 3.5 g/t gold and is
presented in Table 2 below. Table 2 also serves as the Company's
Annual Mineral Resource statement.
Table 2: Annual Mineral Resource Statement as at 30/06/2015
Cononish Main Vein Gold and Silver Mineral Resources (reported
at a 3.5 g/t Au cut-off) compiled 12/01/2015.
Scotgold Resources Limited - Cononish Gold Project
Mineral Resource Estimate as at 12 January, 2015
Reported at a cut-off grade of 3.5 g/t gold
----------------------------------------------------------------------------
Classification K Tonnes Grade Metal Grade Metal In situ
Au g/t AuKoz Ag g/t Ag Koz Dry BD
---------------- --------- -------- ------- -------- -------- --------
Measured
in situ 60 15.0 29 71.5 139 2.72
---------------- --------- -------- ------- -------- -------- --------
Indicated
in situ 474 14.3 217 58.7 895 2.72
---------------- --------- -------- ------- -------- -------- --------
Indicated
- Mined
Stockpile 7 7.9 2 39.0 9 2.72
---------------- --------- -------- ------- -------- -------- --------
Sub- total
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:00 ET (06:00 GMT)
M & I 541 14.3 248 59.9 1,043 2.72
---------------- --------- -------- ------- -------- -------- --------
Inferred
-in situ 75 7.4 18 21.9 53 2.72
---------------- --------- -------- ------- -------- -------- --------
Total
MRE 617 13.4 266 55.3 1,096 2.72
---------------- --------- -------- ------- -------- -------- --------
Reported from 3D block model with grades estimated
by Ordinary kriging with 15 ml x 15 ml SMU Local Uniform
Conditioning Adjustment. Minimum vein width is 1.2m.
Totals may not appear to add up due to appropriate
rounding.
----------------------------------------------------------------------------
Mineral Resources reported as at 30/06/2014 totalled (including
Measured, Indicated and Inferred categories) 460,600t @ 11.7g/t Au
and 45g/t Ag at a 3.5g/t cut off. (This estimate was compiled in
accordance with the JORC (2004) Code and is superseded by the
recent update).
A comparison of key parameters between the two estimates is
given below:
-- Gold metal content of the Measured and Indicated Resource increased by 201% to 248 K oz;
-- Average gold grade of the Measured and Indicated Resource increased by 9% to 14.3 g/t;
-- Measured and Indicated Resource tonnes increased by 176% to 541 K tonnes;
-- Total MRE tonnes increased by 34% to 617 K tonnes; and
-- Average gold grade of the Total MRE increased by 18% to 13.4 g/t gold;
The Cononish mineralisation remains open at depth down plunge
and to the west along strike. There is therefore potential to add
to the resource by further extensional drilling.
In addition to the currently defined resources, Scotgold
believes that there is potential to define further resources close
to the Cononish mine, subject to appropriate further work.
Extensive gold-in-soil anomalies, mineralisation associated with
outcrops and trenching and geophysical anomalies close to the
current resource clearly warrant further follow up. In addition,
there are indications that other reefs are present in the area too.
At this stage, such figures are highly conceptual and there is no
guarantee that further exploration will define additional
resources.
Ore Reserves
As part of initial work towards developing the BFS, Bara
Consulting UK Ltd completed a thorough review of the 2013 Cononish
Development plan in order to identify opportunities to not only
improve on the plan but to also improve the confidence in the plan.
As a result of this review, further work was undertaken on the
mining methodology, access design, geotechnical evaluation and
overall mine design.
The outcome of this work was that a revised Development plan was
completed in all areas to at least a Prefeasibility Study level and
consequently the Company estimated an Ore Reserve in accordance
with the JORC 2012 code based on the Mineral Resource Estimate
(MRE) issued in January 2015.
The new Reserve Estimate is shown in table 3 below.
Table 3 also serves as the Company's Annual Ore Reserve
statement as at 30/06/2015.
Table 3 Annual Ore Reserve Statement as at 30/06/2015
As at 25 May 2015 (JORC 2012 Code)
------------------------------------------------------
Classification Proven Probable Total
--------------------- --------- ----------- -------
Tonnes ('000) 65 490 555
--------------------- --------- ----------- -------
Au Grade (g/t) 11.5 11.1 11.1
--------------------- --------- ----------- -------
Au Metal (k oz) 24 174 198
--------------------- --------- ----------- -------
Ag Grade (g/t) 51.5 47.2 47.7
--------------------- --------- ----------- -------
Ag Metal (k oz) 108 743 851
--------------------- --------- ----------- -------
(Bara Consulting Limited Ore Reserve Statement
dated May 2015)
------------------------------------------------------
As at 30 April 2013 (JORC 2004 Code)
------------------------------------------------------
Classification Proven Probable Total
--------------------- --------- ----------- -------
Tonnes ('000) 0 200 200
--------------------- --------- ----------- -------
Au Grade (g/t) 0 11 11
--------------------- --------- ----------- -------
Au Metal (k oz) 0 71 71
--------------------- --------- ----------- -------
Ag Grade (g/t) 0 45 45
--------------------- --------- ----------- -------
Ag Metal (k oz) 0 289 289
--------------------- --------- ----------- -------
(Development Plan dated 30 April 2013)
------------------------------------------------------
Variance - Increase / (Decrease) 2013 to
2015
------------------------------------------------------
Classification Proven Probable Total
--------------------- --------- ----------- -------
Tonnes ('000) n/a 145% 177%
--------------------- --------- ----------- -------
Au Grade (g/t) n/a 1% 1%
--------------------- --------- ----------- -------
Au Metal (k oz) n/a 145% 179%
--------------------- --------- ----------- -------
Note: the Ore Reserve estimates reported in the Development Plan
dated 30/04/2013 under the JORC 2004 code are no longer applicable
(as discussed in the 2014 Annual Report) but are presented here for
comparative purposes only.
For greater detail on the parameters derived from this work and
used for the Ore Reserve estimation process, refer to ASX release
(26/05/2015 - Cononish Gold Project Study Update and Reserve
Estimate) on the Company's website.
The most significant factor underlying the increase in the 2015
Ore Reserve estimate is the Mineral Resource Estimate (MRE)
published in January 2015. The increased confidence in this MRE and
the consequent increase in material classified as Indicated,
together with the work done to verify the modifying factors, has
resulted in the estimation of both Proven and Probable categories
of Ore Reserve.
There were no Ore Reserves reported for the project as of
30/06/2014.
Bankable Feasibility Study
A summary of the key attributes of the project from the BFS are
given below
-- Mineralization occurs in a narrow (average width of about 2 m) near vertical quartz vein.
-- The project has a resource estimate in Measured, Indicated
and Inferred categories (see ASX release "Resource Estimate Update"
dated 22/01/2015) of 541,000 tonnes at a gold grade of 14.3 g/t and
a silver grade of 59.7 g/t. The average Bulk Density is 2.72
tonne/m3.
-- After taking into account various modifying factors, the
proven and probable ore reserves (see ASX release "Cononish Gold
Project Study Update and Reserve Estimate" dated 26/05/2015),
comprises 555,000 tonnes at a gold grade of 11.1 g/t and a silver
grade of 47.7 g/t.
-- Proven and probable ore reserves represent 12% and 88% of the
reported production target respectively. No inferred resources are
considered in the BFS.
-- Access will be from the existing exploration adit and
footwall ramps will provide access to ore drives at a 15m vertical
interval. A rock pass system has been included to improve ore
handling and the transfer of waste.
-- The mining method will be a retreat top down Long Hole Open
Stoping method using conventional trackless equipment. Shrinkage
stoping was investigated but was only economically viable in the
very narrowest (<1.4 m) areas of the mine and was therefore not
considered further.
-- Full production will be at 72,000 tonnes per annum. The life
of mine at full production based on the current reserves in the
Proven and Probable categories is approximately 8 years. The mining
production schedule adequately takes into account the constraints
mentioned below. Average gold and silver production will be
approximately 22,208 ounces gold and 85,081 ounces silver per annum
respectively or 23,370 ounce equivalent gold
-- Mining permission has been granted but with certain
conditions which have been accommodated within the mine plan.
Approximately 129,000 tonnes of tailings (after taking into account
the mass pull) is scheduled to be stored in old stopes towards the
end of the mine's life, enabling the full capacity of the Tailings
Management Facility ('TMF') to be restricted to 400,000 tonnes and
minimising surface impact.
-- Waste is only trucked to surface when required for the
building of the TMF and various screening berms (73,000 tonnes).
All other waste will be stored in old stopes (163,000 tonnes).
-- Based on extensive testwork by Lakefield, Gekko and AMMTEC,
the plant is designed as a conventional gravity and flotation
plant. 25% of the gold will be recovered on site, it is estimated,
into a doré bar with the balance produced as concentrate to be
treated off site. Overall estimated recovery is 93% for gold and
90% for silver The doré and concentrate will be sold "at the gate"
to third party processors.
-- The process plant will be housed in a single multi-use
building which will also contain a workshop and office area. This
is designed to have minimal visual and noise impact on the
surrounding area.
Financial Results
The following costs have been estimated at an accuracy of
between -5% and +15% and include appropriate contingencies:
-- Peak funding requirement (pre production expenditure): GBP18.5 million.
-- Total LoM Capital Expenditure: GBP24 million.
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:00 ET (06:00 GMT)
-- Average operating cost: GBP110 per tonne treated (including
marketing, interest and royalty charges). It should be noted that
transport, smelting and refining charges where reflected as cost of
sales in the PFS. These costs have been included as part of
operating costs in the BFS.
-- Average operating cost: GBP327 (US$ 523) per ounce equivalent
gold (on the same basis as above).
-- All in cost including capital GBP455 (US$ 729) per ounce equivalent gold.
The following financial results were estimated using a gold
price of US$ 1,100/ounce, a silver price of US$ 15/ounce and a
US$/GBP exchange rate of 1.6:
-- EBITDA GBP67.4 million
-- Pre-tax NPV@10% GBP22.9 million
-- Pre-tax IRR 45%
-- Post-tax NPV@10% GBP18.5 million*
-- Post-tax IRR 41%*
-- Average profit margin 53%
-- Payback 19 months
* Note post-tax calculations are based on a hypothetical all
equity funding scenario and as such are illustrative only.
Table 4 shows the pre-tax cashflow sensitivity to gold
price.
Table 4 Pre Tax Cashflow Sensitivity
PRE-TAX CASHFLOW SENSITIVITY TO
GOLD PRICE
----------- -------- ---------------------------------------------------------------------
Gold US$700/ US$900/ US$1,000/ US$1,100/ US$1,200/ US$1,300/ US$1,500/
Price ounce ounce ounce ounce ounce ounce ounce
----------- -------- --------- ---------- ---------- ---------- ---------- ----------
Pre GBP1.5M GBP22.5M GBP32.9 GBP43.4M GBP53.9 GBP64.3M GBP85.3M
Tax
Cashflow
NPV
(10%) (GBP4M) GBP9M 16.1 GBP23M 29.8 GBP37M GBP50M
IRR 0% 25% 35% 45% 54% 64% 82%
----------- -------- --------- ---------- ---------- ---------- ---------- ----------
Planning status
During 2014, the Company held discussions with the Planning
Authority regarding the variation of condition 13 of the Planning
Consent relating to the hours of operation of the processing plant
and subsequently submitted an application to vary this condition.
The application was unanimously approved at a meeting of the
Planning Authority Board and the relevant legal agreements were
approved on 6 February 2015.
The variation provides for a change to the hours of work
permitted for the operation of the processing plant to a 24/6 basis
(excluding Sundays and public holidays) compared to the previously
permitted 16/6 basis (excluding Sundays and public holidays) and
will facilitate smoother plant operations and possible capital
expenditure reductions in respect of the processing plant.
The decision notice granting planning permission to the project
issued by the Planning Authority on 13 February 2012 (and
subsequently re-issued on 6 February 2015) requires a number of
'suspensive' conditions to be satisfied prior to the start of
development. Written submissions for all these conditions have been
made (excluding those to be made immediately prior to the start of
development) and 64% of the submissions have been accepted by the
Planning Authority and the conditions discharged. Finalisation of
the discussions with the Planning Authority relating to the
discharge of the outstanding conditions will re-commence once
further progress towards completing finance for the project has
been made.
As such, all necessary permitting has either been granted or can
be completed within a short time frame and engineering design work
is at a stage where it can be rapidly finalised on securing
finance, thus ensuring a rapid start to development. Given the
advanced state of project development, the Company believe Cononish
could be in production within 18 months of obtaining financing.
The Company continues in discussion with possible finance
providers to examine financing options to bring the project to a
development decision.
GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities
on its substantial land position in the Dalradian group of the
south west Grampians, a terrain highly prospective for both gold
and potential base metal occurrences. The majority (85%) of the
area currently under option to Scotgold is located outside the Loch
Lomond and the Trossachs National Park.
The Company's strategy has been to advance the Cononish Project
to production whilst conducting early stage regional exploration
over the wider Grampian Gold project area in conjunction with
follow up work on the more advanced prospects close to the Cononish
project area.
The Grampian Gold project encompasses a large area of the highly
prospective Dalradian sequence. Basic exploration data, including
gravity and airborne magnetics, is available from government
surveys carried out between the 1950s and 1970s but is of a quality
and spacing that does not adequately reflect the prospectivity of
the area. This and the general lack of previous exploration over
the area (other than early stage exploration in the vicinity of the
Cononish project) has dictated the Company's approach to
exploration.
In order to advance its understanding of the regional setting,
over the past four years, the Company has embarked on a regional
scale stream sediment sampling program.
In the initial wide spaced regional program, in excess of 750
stream sediment samples were taken over the area. Initial
interpretation of these results continues and this program is now
being followed up by a more detailed infill sampling program in the
anomalous result areas in order to further target areas for
detailed fieldwork and prospecting. To date a further 450 samples
have been taken in the infill program with the program expected to
be completed by year end. Interpretation of the stream sediment
results is on-going, in conjunction with work undertaken by Drs.
Gumiel and Arias (see below).
In parallel with this regional program, Scotgold continues to
evaluate previously identified high grade outcrop samples
identified by previous exploration close to the Cononish
project.
Initially, the Company conducted a re-sampling program to verify
previously identified occurrences and the program confirmed the
presence of a large number of high grade gold / silver vein
outcrops in an area located between two major regional faults, the
Tyndrum - Glen Fyne fault and the Ericht - Laidon fault and
associated with the fractures generated by movements along these
faults.
Considerable follow up work has been carried out to examine the
extent of these occurrences through further fieldwork, detailed
rock chip sampling, initial short surface drilling and (in some
cases) deeper diamond drilling and the Company believe that further
significant exploration expenditure is justified on many of these
prospects when financing is available. The most advanced of these
prospects include:
1) the River Vein area - diamond drilling below exceptionally
high grade surface rock chip samples has proved structural
continuity of a vein structure to a depth of approximately 100m and
a similar strike extent as defined by current drilling and remains
open along strike and at depth: this warrants further diamond
drilling (see Press Release - Exploration Progress at River Vein -
30/01/2012).
2) the Sron Garbh mafic / ultramafic complex - short surface
drilling intersected highly anomalous grades of Gold, Platinum,
Palladium, Copper Nickel and Cobalt, in and close to the 'Gabbroic
/ Appinitic' zone of the complex. Mineralisation is seen to be
contained in 'sulphide blebs' in a 'leopard rock' textured zone.
These characteristics are diagnostic of the worldwide 'magmatic Cu
- Ni - PGE - Au' group of deposits associated with mafic /
ultramafic intrusives such as Aguablanca in Spain, certain parts of
the Sudbury mines in Ontario, Canada; Voisey's Bay in Labrador
Canada and Lac des Isles in Quebec, Canada. Such deposits occur as
sulphide concentrations (massive through to disseminated sulphides)
associated with a variety of mafic and ultramafic magmatic rocks
(see Press Release - Highly Anomalous Platinum Group Metals Gold
and Base metals - 07/03/2012).
3) the Auch / Beinn Odhar veins - shallow surface drilling below
one of the identified high grade outcrops confirmed its
prospectivity and a considerable number of the other currently
identified outcrops require initial short surface drilling as a
precursor to further more intensive drilling.
The Company recently engaged the services of Drs. Gumiel and
Arias of Consulting de Geología y Minería, S.L., to conduct a
structural study of the Cononish deposit and Tyndrum area. Dr.
Gumiel is an expert in structural geology and the structural
control of mineral deposits with over 38 years' experience in
research and mining exploration. Dr. Arias has over 15 years'
experience as a specialist in database management of
geological-mining data, Geographical Information Systems (GIS) and
3D geological modelling. The study aims to place structural and
geochemical controls on the distribution of gold across the
Cononish/Tyndrum area. The structural and geochemical criteria for
the Tyndrum area are anticipated to be applicable across the
Grampian Project region to aid and focus regional exploration. In
addition, significant work has been undertaken on the existing
database to develop 2D and 3D representations of data. The final
results of this study are expected shortly.
Competent Persons Statement:
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:00 ET (06:00 GMT)
The information in this report that relates to Exploration
Results is based on information compiled by Mr David Catterall, Pr
Sci Nat, who is a member of the South African Council for Natural
Scientific Professions. Mr Catterall is employed as a consultant to
Scotgold Resources Ltd. Mr Catterall has sufficient experience
which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012
Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. Mr Catterall consents
to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Note: No new exploration results are presented in this report.
All results have been previously notified under JORC 2004 and are
contained in Scotgold Annual reports 2008 - 2014 and various
corresponding ASX releases
The information in this report that relates to the 2015 Mineral
Resources for Cononish Gold Project (refer ASX release - Resource
Estimate Update - 22/01/2015) is based on information compiled by
Malcolm Titley, a Competent Person who is a Member of The
Australasian Institute of Mining and Metallurgy. Mr Titley is
employed by CSA Global (UK) Limited, an independent consulting
company. Mr Titley has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Titley consents to the inclusion in
the report of the matters based on his information in the form and
context in which it appears.
The information in this report that relates to the 2015 Ore
Reserves for Cononish Gold Project (refer ASX announcement dated
26/05/2015) is based on information compiled by Pat Willis, a
Competent Person who is registered as a Professional Engineer
(Pr.Eng.) with the Engineering Council for South Africa (ECSA) and
a Fellow in good standing and Past President of the Southern Africa
Institute of Mining and Metallurgy (FSAIMM). Mr Willis is employed
by Bara Consulting Limited, an independent consulting company. Mr
Willis has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Mr Willis consents to the inclusion in the report of the
matters based on his information in the form and context in which
it appears.
Further, the Company confirms it is not aware of any new
information or data that materially affects the information
contained in the original announcements and that all material
assumptions and technical parameters underpinning the estimate of
Resources and Reserves continue to apply and have not materially
changed.
Tenement details
The Company holds a Lease (100%) from the Crown Estate
Commissioners over Cononish Farm, County of Perth, Scotland UK.
The Company holds a Lease (100%) from the landowner over
Cononish Farm, County of Perth, Scotland UK.
The Company holds five Mines Royal Option Agreements (100%) with
the Crown Estate Commissioners as detailed below:
Glen Orchy: Location - counties of Perth and Argyll, Scotland
UK
Glen Lyon: Location - counties of Perth and Argyll, Scotland
UK
Inverliever: Location - counties of Dunbarton, Argyll and Perth,
Scotland UK
Knapdale: Location - county of Argyll, Scotland UK
Ochils: Location - county of Clackmannan, Perth, Kinross and
Stirling, Scotland UK
No tenements were acquired or disposed of during the year (1)
although as previously noted, the Inverliever option area will
reduce in size on finalization of matters with the Crown
Estates
No other beneficial interests are held in any farm-in or
farm-out agreements
No other beneficial interests in farm-in or farm out agreements
were acquired or disposed of during the quarter
Note 1: The size of the Inverliever option agreement will be
reduced from 864km(2) to 660km(2) on finalisation of agreements
with the Crown
During 2014, the Crown indicated it was undertaking a review of
the grant and renewal of its Option Agreements. The Crown indicated
by letter of 21 January 2015, subject to the conclusion of the
appropriate legal agreements that it intended to re-grant all the
Company's existing Options subject to a reduction in area in the
Inverliever option area. By letter of 14 September 2015, the Crown
have offered to renew the existing Options (including the area
reduction mentioned) under the existing process pending
finalisation of the legal agreements relating to the new
regime.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED
2015 2014
$ $
Revenue 10,607 20,413
Administration costs (380,663) (301,644)
Interest expense (91,909) (192,959)
Unwinding of convertible note (110,338) -
discount
Depreciation and profit on disposal
of property, plant and equipment (19,097) (20,545)
Exploration expensed as incurred (393,196) -
Employee and consultant costs (290,597) (236,399)
Listing and share registry costs (174,758) (199,137)
Legal fees (185,448) (93,416)
Borrowing costs (174,419) (5,545)
Share-based payments (13,615) (121,154)
Office and communication costs (106,503) (105,642)
Other expenses (183,029) (255,001)
LOSS BEFORE INCOME TAX BENEFIT (2,112,965) (1,511,029)
Income tax benefit - 44,880
LOSS FOR THE YEAR (2,112,965) (1,466,149)
Other Comprehensive Income
Items that may be reclassified
to Profit or Loss
Exchange difference on translation
of foreign subsidiaries 25,466 (14,633)
Total comprehensive result for
the year (2,087,499) (1,480,782)
============ ============
Basic (loss) per share (cents
per share) (0.25) (0.44)
STATEMENT OF FINANCIAL POSITION CONSOLIDATED
AS AT 30 JUNE 2015
2015 2014
$ $
CURRENT ASSETS
Cash and cash equivalents 802,649 640,857
Trade and other receivables 38,440 169,989
Other current assets 23,712 13,026
Total Current Assets 864,801 823,872
------------- ------------
NON-CURRENT ASSETS
Trade and other receivables 102,649 90,335
Plant and equipment 104,605 121,301
Mineral exploration and evaluation 14,794,913 13,894,769
Total Non Current assets 15,002,167 14,106,405
TOTAL ASSETS 15,866,968 14,930,277
------------- ------------
CURRENT LIABILITIES
Trade and other payables 343,853 353,598
Other current liabilities 71,920 69,060
Interest bearing liabilities - 3,031,286
------------- ------------
415,773 3,453,944
NON-CURRENT LIABILITIES
Interest bearing liabilities 1,353,783 -
------------- ------------
1,353,783 -
TOTAL LIABILITIES 1,769,556 3,453,944
NET ASSETS 14,097,412 11,476,333
============= ============
EQUITY
Issued capital 22,711,529 18,463,121
Reserves 1,463,805 978,169
Accumulated losses (10,077,922) (7,964,957)
TOTAL EQUITY 14,097,412 11,476,333
============= ============
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED
Issued Accumulated Options Convertible Foreign Total
Capital Losses Reserve Note Currency Equity
Reserve Translation
Reserve
Year Ended 30 June 2014 $ $ $ $ $
Balance 1 July 2013 16,766,418 (6,498,808) 917,000 - (45,352) 11,139,258
Placements (Note 12) 925,270 - - - - 925,270
Entitlements Issue 830,872 - - - - 830,872
Options issued - - 121,154 - - 121,154
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Share issue expenses (59,439) - - - - (59,439)
Total comprehensive
result for the year - (1,466,149) - - (14,633) (1,480,782)
----------- ------------- ---------- ------------ ------------- ------------
As at 30 June 2014 18,463,121 (7,964,957) 1,038,154 - (59,985) 11,476,333
=========== ============= ========== ============ ============= ============
Year Ended 30 June 2015
Balance 1 July 2014 18,463,121 (7,964,957) 1,038,154 - (59,985) 11,476,333
Placements (Note 12) 1,586,215 - - - - 1,586,215
Entitlements Issue (Note
12) 2,861,177 - - - - 2,861,177
Options issued - - 103,615 - - 103,615
Share issue expenses (198,984) - - - - (198,984)
Equity portion of notes
issued (Note 11) - - - 356,555 - 356,555
Total comprehensive
result for the year - (2,112,965) - - 25,466 (2,087,499)
----------- ------------- ---------- ------------ ------------- ------------
As at 30 June 2015 22,711,529 (10,077,922) 1,141,769 356,555 (34,519) 14,097,412
=========== ============= ========== ============ ============= ============
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
CONSOLIDATED
2015 2014
$ $
CASH FLOWS FROM OPERATING
ACTIVITIES
Payment to suppliers (1,106,066) (1,044,010)
Interest income received 5,709 9,756
Net Cash Outflow From Operating
Activities (1,100,357) (1,034,254)
------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for exploration
expenditure (1,274,409) (596,402)
Purchase of property, plant
and equipment (2,400) 2,641
------------ ------------
Net Cash Outflow From Investing
Activities (1,276,809) (593,761)
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of shares
and options 4,136,178 1,756,142
Share and option issue transaction
costs (198,984) (59,439)
Borrowings net of costs 1,600,000 -
Loan repayments (3,031,286) -
------------ ------------
Net Cash Inflow From Financing
Activities 2,505,908 1,696,703
------------ ------------
Net increase in cash held 128,742 68,688
Effect of exchange rate fluctuations
on cash and cash equivalents 33,050 1,916
Cash and cash equivalents
at the beginning of this
financial year 640,857 570,253
Cash and cash equivalents
at the end of this financial
year 802,649 640,857
============ ============
NOTES
NOTE 1. The full annual report is now available on the Company's
website and will be posted to shareholders shortly. The information
set out within this announcement is not the audited results but has
been extracted from the Annual Report and Accounts
NOTE 2
Reporting Basis and Conventions
The financial statements have been prepared on the basis of
accounting principles applicable to a going concern, which assumes
the commercial realisation of the future potential of the
consolidated entity's assets and the discharge of their liabilities
in the normal course of business.
The Board considers that the consolidated entity is a going
concern and recognises that additional funding is required to
ensure that the consolidated entity can continue to fund its
operations and further develop their mineral exploration and
evaluation assets during the twelve month period from the date of
this financial report. Such additional funding as occurred during
the year ended 30 June 2015 as disclosed in Note 12, can
potentially be derived from either one or a combination of the
following:
-- The placement of securities under the ASX Listing Rule 7.1 or otherwise;
-- An excluded offer pursuant to the Corporations Act 2001; or
-- The sale of assets.
Accordingly, the Directors believe the consolidated entity will
obtain sufficient funding to enable it and the consolidated entity
to continue as going concerns and that it is appropriate to adopt
that basis of accounting in the preparation of the financial
report.
However, the existence of the above conditions constitute a
material uncertainty that may cast significant doubt in relation to
the consolidated entity's ability to continue as a going concern
and whether it will therefore realise its assets and extinguish its
liabilities in the normal course of business.
Statement of Compliance
The financial report was authorised for issue on 29 September
2015.
The financial report complies with Australian Accounting
Standards, which include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS
ensures that the financial report, comprising the financial
statements and notes thereto, complies with International Financial
Reporting Standards (IFRS).
Adoption of new and revised standards
Changes in accounting policies on initial application of
Accounting Standards
In the year ended 30 June 2015, the Directors have reviewed all
of the new and revised Standards and Interpretations issued by the
AASB that are relevant to the consolidated entity's operations and
effective for the current annual reporting period.
It has been determined by the Directors that there is no impact,
material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change is
necessary to consolidated entity accounting policies.
The Directors have also reviewed all new Standards and
Interpretations that have been issued but are not yet effective for
the year ended 30 June 2015. As a result of this review the
Directors have determined that there is no impact, material or
otherwise, of the new and revised Standards and Interpretations on
the consolidated entity's business and, therefore, no change
necessary to the consolidated entity's accounting policies.
Accounting Policies
(a) Basis of Consolidation
A controlled entity is any entity controlled by Scotgold
Resources Limited. Control exists where Scotgold Resources Limited
has the capacity to dominate the decision-making in relation to the
financial and operating policies of another entity so that the
other entity operates with Scotgold Resources Limited to achieve
the objectives of Scotgold Resources Limited. All controlled
entities have a 30 June financial year-end.
All intercompany balances and transactions between entities in
the consolidated entity, including any unrealised profit or losses,
have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the consolidated
entity during the year, their operating results have been included
from the date control was obtained or until the date control
ceased.
(b) Income Tax
The charge for current income tax expenses is based on the
profit for the year adjusted for any non-assessable or disallowable
items. It is calculated using tax rates that have been enacted or
are substantively enacted by the balance date.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising between the tax bases of
assets and liabilities and their carrying amount in the financial
statements. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or liability is
settled. Deferred tax is credited in the statement of comprehensive
income except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted
directly against equity.
Deferred income tax assets are recognised to the extent that it
is probable that future tax profits will be available against which
deductible temporary difference can be utilised.
The amount of benefits brought to account or which may be
realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the
anticipation that the consolidated entity will derive sufficient
future assessable income to enable the benefit to be realised and
comply with the conditions of deductibility imposed by the law.
(c) Plant and Equipment
Each class of plant and equipment is carried at cost less, where
applicable, any accumulated depreciation.
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Plant and equipment are measured on the cost basis less
depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually
by Directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows which will be received from
the assets employment and subsequent disposal. The expected net
cash flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future benefits associated with the item will flow to
the consolidated entity and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
statement of comprehensive income during the financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised
lease assets, but excluding computers, is depreciated on a reducing
balance commencing from the time the asset is held ready for use.
Computers are depreciated on a straight line basis over their
useful lives to the consolidated entity commencing from the time
the asset is held ready for use.
The depreciation rates used for each class of depreciable assets
are:
Class of Fixed Asset: Depreciation
Rate:
Plant and Equipment 15 - 50%
The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance date.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains and losses are
included in the statement of comprehensive income. When revalued
assets are sold, amounts included in the revaluation reserve
relating to that asset are transferred to retained earnings /
accumulated losses.
(d) Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is either
written off as incurred or accumulated in respect of each
identifiable area of interest. Tenement acquisition costs are
initially capitalised. Costs are only carried forward to the extent
that they are expected to be recouped through the successful
development of the areas, sale of the respective areas of interest
or where activities in the area have not yet reached a stage which
permits reasonable assessment of the existence of economically
recoverable reserves.
Accumulated costs in relation to an abandoned area are written
off in full against profit in the year in which the decision to
abandon the areas is made.
When production commences, the accumulated costs for the
relevant area of interest are amortised over the life of the area
according to the rate of depletion of the economically recoverable
reserves.
Exploration and evaluation expenditure is reclassified to
development expenditure once the technical feasibility and
commercial viability of extracting the related mineral reserve is
demonstrable.
A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs
in relation to that area of interest.
Restoration, rehabilitation and environmental costs necessitated
by exploration and evaluation activities are expensed as incurred
and treated as exploration and evaluation expenditure.
(e) Impairment of Assets
At each reporting date, the Directors review the carrying values
of its tangible and intangible assets to determine whether there is
any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the assets, being the
higher of the asset's fair value less costs to sell and
value-in-use, is compared to the asset's carrying value. Any excess
of the asset's carrying value over its recoverable amount is
expensed to the statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of
an individual asset, the consolidated entity estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
(f) Provisions
Provisions are recognised where there is a legal or constructive
obligation, as a result of past events, for which it is probable
that an outflow of economic benefits will result and that outflow
can be reliably measured.
(g) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with banks, other short-term highly liquid investments that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
(h) Revenue
Interest revenue is recognised on a proportional basis taking
into account the interest rates applicable to the financial
assets.
(i) Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount
of GST or VAT, except where the amount of GST or VAT incurred is
not recoverable from the relevant authority. In these circumstances
the GST or VAT is recognised as part of the cost of acquisition of
the asset or as part of an item in expenses. Receivables and
payables in the statement of financial position are shown inclusive
of GST or VAT.
(j) Issued Capital
Issued and paid up capital is recognised at the fair value of
the consideration received by the Company. Any transaction costs
arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the share proceeds received.
(k) Comparative Figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(l) Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments has been identified as the Board of Directors of Scotgold
Resources Limited.
(m) Share based payments - shares and options
The fair value of shares and share options granted is recognised
as an expense with a corresponding increase in equity. Fair value
is measured at grant date and recognised over the period during
which the grantees become unconditionally entitled to the shares or
share options.
The fair value of share grants at grant date is determined by
reference to the share price at that time.
The fair value of share options at grant date is determined
using a Black-Scholes option pricing model that takes into account
the exercise price, the term of the option, any vesting and
performance criteria, the share price at grant date, the expected
price volatility of the underlying share, the expected dividend
yield and the risk free rate for the term of the option.
Upon the exercise of the option, the balance of the share-based
payments reserve relating to the option is transferred to share
capital.
(n) Foreign currency translation
Both the functional and presentation currency of Scotgold
Resources Limited and its subsidiaries is Australian dollars. Each
entity in the Group determines its own functional currency and
items included in the financial statements of each entity are
measured using that functional currency.
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance date.
All exchange differences in the consolidated financial report
are taken to profit or loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net
investment in a foreign entity. These are taken directly to equity
until the disposal of the net investment, at which time they are
recognised in profit or loss.
Tax charges and credits attributable to exchange differences on
those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate as at
the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair
value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair
value gain or loss.
The functional currency of the foreign operation, Scotgold
Resources is Pounds Sterling (GBP).
As at the balance date the assets and liabilities of these
subsidiaries are translated into the presentation currency of
Scotgold Resources Limited at the rate of exchange ruling at the
balance date and income and expense items are translated at the
average exchange rate for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used.
The exchange differences arising on the translation are taken
directly to a separate component of equity, being recognised in the
foreign currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation
is recognised in profit or loss.
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